Ask the Rational Investor: Steps to Improve Your Portfolio
How quickly markets can change! In our September Ask the Rational Investor, we discussed steps to improve your portfolio after the stock market had recovered about two-thirds of its decline.
After the Federal Reserve's announcement that interest rates will continue increasing for the foreseeable future, the market stumbled back down to recent lows and maybe even a bit lower.
Market volatility though can present opportunities to upgrade the quality of your portfolio positions. Investors should look for tax losses that are large enough to help offset future or current capital gains, and for areas in their portfolio that could be upgraded.
Examples of looking to upgrade your portfolio could include making new or additional investments in high-quality companies that typically are valued at much higher valuations. A few examples might include companies we’ve highlighted before such as Mastercard, United Parcel Service (UPS), or Costco.
Remaining unemotional in periods of market stress can be challenging but carefully and slowly adding equity exposure to wonderful businesses will help you achieve good long-term results. But do it gradually and only invest in highly profitable businesses at reasonable valuations.
Markets are likely to remain volatile over the next several quarters as investors digest how quickly inflation will decline, how high-interest rates will ultimately move, and how deep an economic recession might be.
Many of these answers we just can’t know, but enthusiasm for investing as gauged by many different indicators is quite negative. Usually, these indicators point to at least a short-term bottom.
Sources: Goldman Sachs
Beese Fulmer Private Wealth Management was founded in 1980 and is one of Stark County’s oldest and largest investment management firms. The company serves high-net-worth individuals, families, and non-profits, and has been ranked as one of the largest money managers in Northeast Ohio.